Should the giving styles of the rich and famous alarm us all?

Author

Senior Counsellor and Professor Emeritus of Practice in Philanthropic Studies, Lilly Family School of Philanthropy, IUPUI

Disclosure statement

Leslie Lenkowsky has received funding from many foundations, but none recently and not from the donors who are the major figures in The Givers, the book discussed in this article.
Lenkowsky is affiliated with the Lilly Family School of Philanthropy, which itself receives support from many foundations, including several mentioned in The Givers, including Gates and Atlantic Philanthropies. This funding does not benefit him directly.

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In 1890, pioneer photojournalist Jacob Riis published a book, “How the Other Half Lives,” portraying the squalid lifestyles of the immigrant groups flooding into the slums of New York City. In “The Givers: Wealth, Power, and Philanthropy in a New Gilded Age,” writer, publisher and think-tank founder David Callahan examines a vastly different group, the ultra-wealthy, and how they are using their fortunes to try to change the world. These rich Americans are nowhere near as numerous as the people Riis profiled, nor do their donations account for more than a small share of the nearly US$375 billion Americans gave to charity in 2015. Nonetheless, Callahan sees their philanthropy as creating problems for American civic life and democracy, just as many feared the 19th-century immigration wave was doing.

Callahan maintains that the problem of big philanthropy is not its ideological leanings, but its power to shape the public’s agenda. Through their giving, he argues, the ultra-wealthy wield political clout as outsized as their financial influence. That, correspondingly, diminishes the ability of those less well-off – which is to say, most people – to have an effective say in how they are governed.

As someone who has worked for, researched, taught and written about foundations for several decades (as well as received a few foundation grants), I am not surprised by this argument. However, I do believe that Callahan exaggerates the influence of philanthropists, and gives too little credit to the public’s ability to chart its own course.

Countless bromides

To be sure, Callahan finds much to admire among these mega-donors. They are committed to giving away most of their fortunes in their lifetimes, instead of forming perpetual foundations like John D. Rockefeller and other early 20th-century philanthropists. Many are successful entrepreneurs, not heirs. They are willing to take risks with their funds to solve seemingly insoluble problems, such as fixing inner-city schools or wiping out diseases. They are, for the most part, skillful, persistent, pragmatic and self-effacing, open to joining forces with government, business and other philanthropists to achieve their goals.

But he also finds much to criticize.

He expresses many concerns over the giving patterns of conservative donors, such as the billionaire brothers Charles and David Koch and computer programmer turned hedge fund innovator Robert Mercer and his daughter, Rebekah Mercer. Progressive mega-donors, like former New York City mayor Michael Bloomberg and the former Bay Area banker Herb Sandler, do not emerge unscathed. Nor does the Silicon Valley charitable class, including Bill Gates, Sean Parker, Mark Zuckerberg, Sergey Brin and other tech titans.

In making such criticisms, Callahan is by no means breaking new ground in looking at philanthropy.

In 1936, two decades after Rockefeller established his foundation, an educator named Eduard C. Lindeman produced an investigation of foundations. Titled “Wealth and Culture,” it concluded their interlocking boards sought to preserve the “status quo” to the advantage of their wealthy donors and directors.

Over the years, a steady stream of articles and books along similar lines has followed, mostly memorable for catchy titles such as “No Such Thing as a Free Gift” and “Narcissism and Philanthropy.” Other efforts have painted philanthropy in a better or more neutral light, such as Claire Gaudiani’s “The Greater Good” and Zoltan Acs’ “Why Philanthropy Matters.” But much of the defense of foundation philanthropy has taken the form of countless bromides, emanating from grant-making organizations and their leaders.

In his classic history, “American Philanthropy,” Robert H. Bremner identified this ambivalence when he wrote:

“But on a deeper level there is something about philanthropy that seems to go against the democratic grain… We expect rich men to be generous with their wealth, and criticize them when they are not, but when they make benefactions, we question their motives, deplore the methods by which they obtained their abundance, and wonder whether their gifts will not do more harm than good.”

“The Givers” is the latest example of this angst.

Callahan worries that the overreach of today’s mega-donors could spark a backlash that might obstruct giving for less controversial things like the arts and food pantries. But no signs of that risk appear on the horizon.

In the half-century after the establishment of the Rockefeller Foundation, Congress launched several investigations of what philanthropists were up to, culminating in legislation in 1969 that foundation leaders often decried as “punitive.” In the subsequent five decades, lawmakers have occasionally held hearings, without passing any major legislation, notwithstanding the growing prominence of philanthropy in American life.

Stubborn complexities

Lawmakers may be failing to rein in mega-donors because they don’t share Callahan’s concerns about their leverage. One example he uses to illustrate how today’s philanthropists are trying to control public services is Mark Zuckerberg’s offer of $100 million to Newark, New Jersey, to change its school system. Yet, as Dale Russakoff shows in “The Prize,” her account of what transpired, much of this money paid back wages for school employees. After several years, little change had occurred, though lots of consultants were hired and meetings with public officials and interest groups held. Whatever else money might buy, its influence in education (and other policy areas) is usually limited, if not offset altogether, by the stubborn complexities of American politics.

In any case, given the threat to American democracy he sees, Callahan’s own recommendations are surprisingly modest. His call for greater “transparency” about where philanthropic dollars are going is one that foundation leaders have long championed and made strides toward achieving, despite a variety of arguments for privacy. Ending tax deductions for political activity by philanthropists is another suggestion. But apart from the difficulties of defining and impartially judging such activity, this proposal would not end the influence of the ultra-wealthy – only make it more expensive.

Callahan would also like to turn philanthropy into a more regulated industry, complete with its own government agency providing oversight. Yet, the history of such agencies, such as the Federal Communications Commission, the Interstate Commerce Commission and the Securities and Exchange Commission, is not encouraging. Too often, they have wound up being “captured” by those they are supposed to supervise.

Callahan ultimately acknowledges that to keep the ultra-wealthy from using philanthropy to affect the public’s agenda, the government would either have to intervene in its management (for example, by requiring publicly appointed trustees) or prevent the accumulation of so much wealth in the first place by taxing the rich more.

To control the giving of the rich and famous, Callahan seems to suggest, it must be taken out of their hands.